Biogen puts itself up for sale; shares surge

India

Written by:

Published: Saturday, October 13, 2007, 14:34 [IST]

Subscribe to Oneindia News

BOSTON, Oct 13 (Reuters) Biogen Idec Inc, one of the world's biggest biotechnology companies, has put itself up for sale as it wrestles with slowing growth for its flagship multiple sclerosis drug, Avonex.

The shares of Cambridge, Massachusetts-based Biogen, which has a market capitalization of roughly .3 billion, rose more than 16 percent in after-hours trading, following the Friday announcement. The stock closed up 3.4 percent at .43 in regular trade, the highest since late 2001.

The move follows biotech company MedImmune's agreement earlier this year to be acquired by Anglo-Swedish drugs group AstraZeneca Plc for more than billion in the industry's biggest deal this year.

''There has been a lot of speculation during the last six months -- since MedImmune was acquired,'' said Eric Schmidt, an analyst at Cowen&Co.

Applying a MedImmune-type earnings multiple to Biogen could mean a take-out price of 0 a share, Schmidt said, adding he does not think Biogen will get that much.

Analysts said possible suitors could include big drug companies, which are desperate to fill their product pipelines and have ample cash to spend on acquisitions.

The announcement comes four years after Biogen was acquired by Idec Pharmaceutical Corp for .7 billion.

The company said it hired Goldman Sachs&Co and Merrill Lynch&Co to help find a buyer and that it has already received ''expressions of interest.'' One interested party, Biogen said, is billionaire investor Carl Icahn, who recently took control of biotechnology company ImClone Systems Inc.

''Potential suitors will likely be the big pharmaceuticals companies, as well as those that already have partnerships with Biogen,'' said Damien Conover, an analyst at Morningstar.

Incorporated in 1978, Biogen is one of the most established names in the biotech industry, with products to treat multiple sclerosis, cancer and arthritis.

Biogen's best-selling product, Avonex, posted an 8 percent jump in revenue to 2 million in the June-ending quarter, with the bulk of the growth coming from overseas.

The drug was the main driver behind Biogen Idec's 17 percent jump in quarterly revenue to to 3 million.

The company's other multiple sclerosis drug, Tysabri, is rebounding after being pulled from the market in 2005 due to safety concerns. Biogen said in July that physician adoption of the drug is progressing steadily.

And just this week, Biogen and its marketing partner Elan Corp said there have been no new cases of a potentially deadly brain infection in patients taking the drug.

The strong returns in July led Biogen to raise its revenue growth target to 16 to 18 percent in 2007 from an earlier view of growth in the ''mid-teens.'' Cambridge, Massachusetts-based Biogen's shares rose to .59 in after-hours trading from a close on Nasdaq of .43.